Immigration reform: Silicon Valley hiring practices threatened

Chief Executive Officer Neeraj Gupta of Systems In Motion is photographed April 23 in Newark, Calif. Gupta testified at a Senate hearing this week that many companies use the H-1B visa program for cheaper labor, undermining the U.S. tech workforce. (Aric Crabb/Bay Area News Group)

As Congress tries to tackle the many sides of immigration reform, one of Silicon Valley’s most contentious debates is getting renewed focus: Should high-tech companies be required to hire Americans before recruiting temporary workers from abroad?

The U.S. Senate’s compromise measure would require employers seeking foreign programmers, engineers and other skilled workers to post jobs on a government website and give preference to American job applicants who are “equally or better qualified.” That and other proposed regulations could make it more difficult and expensive for firms to sponsor workers through H-1B visas.

“They are imposing a recruitment requirement for the first time ever,” said Paul Herzog, a Los Angeles immigration lawyer. “That’s a big deal. ... That should make anti-H-1B people happy.”

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But it’s sending a chill through the Indian tech industry because the bill would ban companies from using temporary foreign workers for more than half their U.S. workforces. That provision mostly targets technology outsourcing firms based in India that for years have dominated H-1B recruitment.

There are indications Silicon Valley also has reservations even though the measure would increase the number of H-1B visas.

“Supporters of the Senate bill thought the business community would rally around it,” but they’re not, said Stuart Anderson, of the National Foundation for American Policy, which favors more H-1B visas.

Instead, Silicon Valley groups are lobbying to change provisions that would increase H-1B workers’ minimum pay, tighten rules against displacing U.S. workers and give the Department of Labor more power to investigate hiring.

But one Silicon Valley entrepreneur welcomes the new restrictions. Too many companies use the three-year H-1B visa to bring in cheaper labor, undermining the U.S. tech workforce, the CEO of Newark-based Systems in Motion warned Congress last week.

“The visas are primarily being used for lower costs,” Neeraj Gupta said in his Senate testimony. Each year, technology outsourcing companies such as Cognizant, Infosys, Wipro and Tata Consultancy Services bring thousands of mostly Indian tech workers to the United States on the temporary visas.

The 10 firms that hired the most H-1B workers, most of them India-based, grabbed about 20 percent of the visas in an annual rush that used up all 85,000 this spring.

Many of the workers do tech support for banks and other U.S. firms that contract with the outsourcers.

“Those are all jobs that Americans can easily do, or can easily be trained for,” said Gupta, who testified April 22 before the Senate Judiciary Committee.

Gupta, himself a one-time H-1B worker, now runs what he calls a “domestic outsourcing” IT consulting company that competes for contracts with many of the companies he criticizes.

He sees both the world’s “best and brightest” innovators and future entrepreneurs coming into the United States alongside many more H-1B visa-holders whose main appeal to employers is their willingness to work for lower wages doing the tech world’s grunt work.

Others say the Indian firms are being unfairly vilified to deflect attention from broader problems with the H-1B program, which critics blame for suppressing pay and employment of older, experienced U.S. engineers.

H-1B program critics and supporters have long wielded competing studies to debate these workers’ value. An Economic Policy Institute report last week asserted that the glut of foreign workers has contributed to computer industry wage stagnation, and it rejected industry claims of a U.S. talent shortage in science and engineering.

At the same time, just 3.2 percent of computer and math workers were unemployed in March, according to the U.S. Bureau of Labor Statistics.

And, at $78,200, the average annual earnings of an H-1B worker was about 10 percent higher than U.S. workers with at least a bachelor’s degree in any field, according to a 2011 study by the Public Policy Institute of California.

In IT occupations, new foreign workers earned about 7 percent less than U.S.-born IT workers, but those differences reversed as the foreign workers gained more job experience, the same study said.

“I don’t find any convincing evidence that H-1B workers are earning less than U.S. workers,” said study’s author, Magnus Lofstrom.

While acknowledging that some multinational firms have taken advantage of America’s immigration system to employ “underpaid, sometimes grossly underpaid workers,” Bay Area recruiter Vikki Pachera insists cutting-edge Silicon Valley firms are clamoring for global talent.

“In tech, there’s plenty of jobs,” Pachera said. “We’re certainly producing a lot of great, skilled workers, but there are just not enough of them.” Extraordinarily talented people often come in on visas, she said.

The Senate proposal is a compromise among tech firms, such as Facebook and Microsoft, that say they are desperate for hard-to-find talent, and longtime H-1B skeptics such as U.S. Sen. Dick Durbin, D-Ill., one of the comprehensive bill’s sponsors. He said at last week’s hearing that Americans would be shocked to learn that so many H-1Bs go to outsourcing firms largely based in India “who are finding workers, engineers, who will work at low wages in the U.S. for three years.”

The companies that the new bill could hit hardest have been mostly silent since its introduction.